How to Report Mutual Fund Sales
You can choose from three methods to report the sale of mutual fund shares. Once you choose a method, you must stick with it as long as you own shares of that mutual fund. However, you can use different methods for different mutual funds
These are the three methods:
- Average basis — This is the average cost of all the shares you bought. To learn more, see the Average Basis Method — Mutual Funds tax tip.
- First-in, first-out — You assume the shares you sold were the first ones you bought. To learn more, see the First-In, First-Out Method tax tip.
- Specific share identification — You identify the actual shares you want to sell to minimize your capital gain or maximize your loss.
Also, when figuring the basis of your mutual fund shares, include these:
- Reinvested dividends
- Reinvested capital-gain distributions
- Net undistributed long-term capital gains
- Previously reported wash sales
To learn more, see Publication 564: Mutual Fund Distributions at www.irs.gov.
What is a capital gain or loss, and how do they affect your taxes? Learn more from the tax experts at H&R Block.
Learn more about the adjusted cost basis method of selling shares and get tax answers at H&R Block.
Learn more about the FIFO method of selling shares and get tax answers at H&R Block.
Learn more about Form 3921 and incentive stock option rules with the tax experts at H&R Block.